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United States Government Accountability Office:
GAO:
Report to Congressional Requesters:
January 2013:
Broadcast and Cable Television:
Requirements for Identifying Sponsored Programming Should Be Clarified:
GAO-13-237:
GAO Highlights:
Highlights of GAO-13-237, a report to congressional requesters
Why GAO Did This Study:
The FCC is responsible for ensuring that the public knows when and by
whom it is being persuaded. Requirements direct broadcasters to
disclose when a group or individual has paid to broadcast commercial
or political programming. Political advertising must also comply with
requirements overseen by the FEC. Recognition of sponsored programming
has become increasingly difficult because of new technologies and
increased access to sponsored programming such as video news releases.
GAO (1) describes requirements for sponsorship identification and
federal election disclaimers and stakeholders’ views of the
requirements and (2) assesses how and to what extent FCC and FEC
address complaints. To conduct the work, GAO reviewed relevant laws,
guidance, and enforcement procedures, and interviewed agency officials
and stakeholders about enforcement processes and actions.
What GAO Found:
Sponsorship identification statutes and regulations, overseen by the
Federal Communications Commission (FCC), require broadcasters to
identify commercial content–-usually an advertisement, an embedded
advertisement, or a video news release-—that has been broadcast in
exchange for payment or other consideration. A written or verbal
sponsorship announcement must be made at least once during any
sponsored commercial content except when the sponsor is obvious. For
content considered political or that discusses a controversial issue,
broadcasters must follow all requirements for commercial content and
additional requirements, such as identifying officials associated with
the entity paying for an advertisement. In addition, the Federal
Election Commission (FEC) enforces federal election law that requires
all political communications for a federal election, including
television and radio advertisements, to include a disclaimer
statement. FEC also oversees requirements to report campaign funding
and expenditures, including funding for political advertising. FCC has
guidance that helps broadcasters determine when a sponsorship
announcement is needed, such as when a deejay receives a payment for
airing specific content. While broadcasters consider this guidance
useful, it addresses older technology that in some cases is no longer
used. Furthermore, some broadcasters indicated that it would be
helpful for FCC to clarify how the guidance applies in some
situations, such as when a video news release or product is used
during programming.
According to FCC, it opened 369 sponsorship identification cases
representing just over 1 percent of the Investigations and Hearings
Division’s total cases opened from the beginning of 2000 through 2011.
In 22 of these cases, FCC issued enforcement actions with varying
types of violations and enforcement actions. While FCC follows
standard procedures when addressing complaints, it does not inform the
broadcaster named in the complaint of the outcome of the investigation
in many cases. Most broadcasters we spoke with confirmed that FCC does
not inform them of the status of investigations, and some indicated
they currently do not know the status of several investigations.
According to FCC, it does not communicate status with broadcasters
named in complaints because, among other reasons, it has no legal
obligation to do so. Broadcasters reported the lack of information
about cases and FCC decisions creates uncertainty about the propriety
of their past actions. As a result broadcasters might not have
sufficient information to determine whether they should modify their
practices. This can result in stations’ editing content because of
unwritten regulatory policy or what they assume the policy to be.
Moreover, these investigations can be lengthy, taking from 10 months
to over 5 years to complete when an enforcement action is involved.
From 2000 through May 2012, FEC opened 301 cases based on complaints
alleging violations of political advertisement disclaimer
requirements. FEC assessed civil penalties in 29 cases, 7 of which
were related to television or radio advertisement disclaimers. Unlike
FCC, FEC provides status updates to those involved in investigations
and issues reports explaining investigation findings. FEC also issues
reports explaining case dismissals. These reports can clarify
acceptable and unacceptable practices for the regulated community.
What GAO Recommends:
FCC should, among other things, update its sponsorship identification
guidance and consider providing additional examples relevant to more
modern issues and communicate the resolution of an investigation to
the target of the investigation when a letter of inquiry has been
sent, and develop goals for resolving all sponsorship identification
cases within a specified time frame. GAO provided FCC and FEC with a
draft of this report. FCC indicated it will consider the recommended
actions and how to address the concerns discussed in the report. Both
FCC and FEC provided technical comments.
View [hyperlink, http://www.gao.gov/products/GAO-13-237]. For more
information, contact Mark Goldstein at (202) 512-2834 or
goldsteinm@gao.gov.
[End of section]
Contents:
Letter:
Background:
Sponsorship Identification Requirements Are Manageable, but FCC
Guidance Could Be Clarified:
FCC and FEC Follow Standard Procedures When Addressing All Complaints,
but FCC Does Not Update Broadcasters Named in the Complaint:
Conclusions:
Recommendations:
Agency Comments and Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Federal Communications Commission:
Appendix III: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Advertising Subject to Sponsorship Identification
Requirements:
Table 2: FCC Sponsorship Identification Cases within the
Investigations and Hearings Division, 2000 through 2011.
Table 3: Length of Time for the Investigations and Hearing Division to
Close Cases Involving a Letter of Inquiry and Resulting in an
Enforcement Action.
Table 4: FEC Outcomes for Disclaimer Cases, January 1, 2000, through
May 14, 2012:
Figures:
Figure 1: FCC Investigation and Enforcement Process for Sponsorship
Identification Complaints:
Figure 2: FEC Investigation and Enforcement Process for Disclaimer
Complaints:
Abbreviations:
CATV: community antenna television:
CELA: Office of Complaints Examination and Legal Administration:
CGB: Consumer and Governmental Affairs Bureau:
FCC: Federal Communications Commission:
FEC: Federal Elections Commission:
VNR: video news release:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
January 31, 2013:
The Honorable Nancy Pelosi:
Democratic Leader:
House of Representatives:
The Honorable Henry Waxman:
Ranking Member:
Energy and Commerce Committee:
House of Representatives:
As broadcasters facing budget constraints make greater use of
commercially sponsored content, such as commercial products as part of
entertainment programs, some members of Congress are concerned that
broadcasters are not properly disclosing sponsorship information to
the public. The Federal Communications Commission (FCC) holds
television and radio broadcasters to a basic principle, embodied in
the Communications Act of 1934,[Footnote 1] as amended, that the
public is entitled to know when and by whom it is being
persuaded.[Footnote 2] Sponsorship identification statutes and
regulations, overseen by FCC, require licensed broadcasters operating
television and radio stations, as well as cable operators that
originate programming, to disclose on-the-air when a party gives money
or a payment in-kind for the broadcast of programming content.
[Footnote 3] In many cases, such as a standard 30 second product
commercial, the sponsor of the content is obvious. However, as
consumers make greater use of digital video recorders and other
technologies that allow viewers to bypass commercials, advertisers
turn to different approaches. For example, a news program may accept
money to broadcast a pre-recorded segment on an allergy medication, or
a sitcom or reality show may accept money to prominently feature a
brand of soft drink. In these situations, the product may be stated or
obvious, but the fact that the product sponsor paid to have it
included in the show may not be obvious. Similarly, FCC requires
broadcasters to identify the individual or group truly responsible for
funding an advertisement with political or controversial content.
Thus, FCC's sponsorship identification requirements apply to both
commercial and political advertisements, but the requirements differ
for each. In addition, all political advertising for federal elections
must meet rules enforced by the Federal Election Commission (FEC).
Similar to the changes broadcasters face with commercial advertising
practices, recent changes in election campaign laws have had an impact
on political advertising.
Although the FCC and FEC requirements serve different purposes--
protecting the radio and television listening and viewing public, on
the one hand, and protecting the election process on the other--both
direct disclosure of television and radio advertising sponsorship.
Given the increase in use of sponsored content and changing rules
associated with political content, you asked us to review FCC
enforcement of sponsorship identification, federal election disclaimer
requirements and other information that must be reported to FEC, and
current industry practices. This report (1) describes the sponsorship
identification requirements and guidance for commercial and political
content, the federal election disclaimer requirements, as well as
stakeholders' views of these requirements and guidance, and (2)
assesses how and to what extent FCC and FEC address sponsorship
complaints through each agency's enforcement process.
To describe the sponsorship identification requirements and guidance
and obtain stakeholders views on these requirements and guidance, we
reviewed sponsorship identification and disclaimer statutes and
regulations enforced by FCC and FEC and interviewed officials from
both agencies responsible for administering their respective
requirements. We also reviewed relevant literature as far back as the
Radio Act of 1927 and interviewed agency officials to understand the
history of the statutes and regulations, their purposes, and how they
differ for various media platforms and for different types of
advertising. We interviewed over a dozen stakeholders that are subject
to sponsorship identification requirements, have monitored
broadcasters' compliance with sponsorship identification requirements,
or contributed research to the topic. These stakeholders included
television and radio network officials, consumer representatives,
academics, and trade associations to obtain their views of the effect
of statutes and regulations and possible changes to them.
To determine how and to what extent FCC and FEC address sponsorship
identification complaints, we interviewed FCC and FEC officials
responsible for receiving, processing, and investigating complaints
and analyzed relevant FCC and FEC documents describing agency methods
and processes for identifying violations of sponsorship identification
statutes and regulations, receiving sponsorship identification
complaints, communicating with the complainant and subject of the
complaint, initiating and conducting investigations, and taking
enforcement action. In addition, we analyzed relevant FCC and FEC
databases to describe sponsorship identification and disclaimer
complaints, investigations, and enforcement actions from 2000 through
2011. We also analyzed FCC and FEC strategic plans and data describing
the agencies' respective goals for sponsorship identification and
disclaimer statement complaint processing and enforcement and the
agencies' progress toward meeting their goals.
We conducted this performance audit from March 2012 through January
2013 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives. See
appendix I for a more detailed explanation of our scope and
methodology.
Background:
Federal law has required broadcasters to identify sponsors of radio
program content since 1927.[Footnote 4] Since that time, sponsorship
identification requirements have been amended to expand and further
define the requirements.
* In 1934, the Communications Act established FCC and gave it
authority to administer sponsorship identification requirements for
broadcasters, among other responsibilities, as well as creating
additional sponsorship identification requirements.
* In 1944, FCC adopted rules implementing the sponsorship
identification requirements created in 1934. These rules, which
required a full and fair disclosure of the sponsor's identity, remain
largely unchanged.[Footnote 5]
* In 1960, the Communications Act was amended to redefine the
situations in which broadcasters must identify program sponsors.
[Footnote 6] The need for this change arose due largely to the payola
scandals of the late 1950s. The conference report accompanying the
1960 act included 27 case examples that were included to provide
guidance on how the committee believed the sponsorship identification
requirements should be applied.[Footnote 7]
* In 1963, FCC adopted regulations implementing the 1960 amendments
[Footnote 8] and provided 36 sponsorship identification case examples
as guidance.[Footnote 9]
* In 1969, FCC adopted regulations applying sponsorship identification
requirements modeled on the broadcast rules to cablecasting by
community antenna television systems (CATV). Cablecasting was defined
as "programming distributed on a CATV system which has been originated
by the CATV operator or by another entity, exclusive of broadcast
signals."[Footnote 10]
* In 1972, FCC updated its regulations to apply sponsorship
identification requirements to programming under the exclusive control
of cable television operators.[Footnote 11]
* In 1975, FCC clarified the meaning of its 1944 requirement for full
and fair disclosure of the identity of the sponsor, modifying its
regulations to make clear that broadcasters and cablecasters[Footnote
12] are expected to look beyond the immediate source of payment where
they have reason to know (or could have known through the exercise of
reasonable diligence) that the purchaser of the advertisement is
acting as an agent for another, and to identify the true sponsor.
[Footnote 13]
* In 1991, FCC adopted rules requiring visual and audible sponsorship
identification announcement for televised advertisements concerning
political issues.[Footnote 14]
* In 1992, FCC amended the requirements for advertisements concerning
candidates by removing the requirement for an audible announcement and
adopting specific criteria for a visual announcement.[Footnote 15] The
visual sponsorship identification announcement consist of letters at
least 4 percent of the vertical picture height and that the statement
be shown for at least 4 seconds.
There have been no changes to the sponsorship identification statutes
or regulations since 1992, although there have been more recent FCC
cases affecting their interpretation and application.[Footnote 16]
These sponsorship identification requirements generally apply to
different types of advertising. Table 1 shows the range of different
types of content that often require a sponsorship announcement,
including commercial advertising where the sponsor is not typically
apparent and political or controversial issue advertising where an
announcement must meet additional requirements.
Table 1: Advertising Subject to Sponsorship Identification
Requirements:
Commercial advertising: Embedded advertising;
Any programming intended to promote any service, facility or product
offered: Showing or mentioning commercial products, through placement
or integration into the dialogue or plot of a program in exchange for
payment, products, or other inducement.
Commercial advertising: Video news releases;
Any programming intended to promote any service, facility or product
offered: Video programming that can be included as part of news
programming. Such programming may use actors to play reporters or
include suggested scripts for broadcasters and cablecasters to use
when introducing stories and are provided to them without cost by
outside entities.
Commercial advertising: Political advertising;
Any programming intended to promote any service, facility or product
offered: Any programming supporting or opposing any candidate for
political office or discussing a political issue.
Commercial advertising: Advertising about a controversial topic;
Any programming intended to promote any service, facility or product
offered: Any programming addressing a controversial matter of public
importance or interest.
Source: GAO analysis.
[End of table]
Presently, the Communications Act, as implemented by FCC, requires
broadcasters and cablecasters to disclose to their listeners or
viewers if content has been aired in exchange for money, services, or
other inducement. For commercial content, such as advertisements,
embedded advertisements, and video news releases,[Footnote 17] the
announcement must be aired when the content is broadcast and can be
either a visual or an audible announcement. Political and
controversial content must also have either type of announcement when
aired on television, but candidate advertisements have specific visual
requirements. In addition, when anyone provides or promises to provide
money, services, or other inducement to include programming in a
broadcast, that fact must be disclosed to the broadcaster or
cablecaster. Both the person providing or promising to provide the
money, services, or other benefits and the recipient must make this
disclosure so that the station can broadcast the sponsorship
identification announcement.[Footnote 18]
The general public and to a lesser extent other sources, such as media
public interest groups, file complaints with FCC about violations.
Because of the high number of broadcasters and cablecasters, FCC
relies on the public as an important source of information about
compliance with requirements.[Footnote 19] The public is able to
assist in monitoring broadcasters' compliance with requirements
because, as we will describe later in our finding on requirements,
broadcasters are required to maintain a publicly available inspection
file. This publicly available file lists pertinent information, such
as quarterly issues and programs list, which describes the programs
that have provided the station's most significant treatment of
community issues during the preceding 3 months.[Footnote 20] The
public can access the public inspection file to check and monitor
broadcasters' compliance and service.
As part of its enforcement process, FCC investigates complaints about
potential violations by broadcasters and cable operators of the
statutes and rules it administers, including sponsorship
identification complaints. Two bureaus within FCC--the Consumer and
Governmental Affairs Bureau (CGB) and the Enforcement Bureau--are
primarily responsible for developing and implementing procedures for
processing complaints, conducting investigations, and taking
enforcement actions. As part of its role of responding to consumer
complaints and inquiries, CGB initially processes the majority of the
complaints FCC receives. To the extent that a complaint is defective,
for example, for failing to identify a particular broadcast, including
its date, time of day, and the station on which it was aired, CGB will
dismiss the complaint as incomplete and advise the complainant
accordingly, providing guidance as to what information should be
included in a complaint. CGB forwards most complaints deemed complete
to the Enforcement Bureau, but some complaints, including political
sponsorship identification complaints go to the Media Bureau for
further investigation.[Footnote 21] When FCC discovers violations it
can take various enforcement actions dependent on the seriousness of
the violation, such as admonishment, monetary forfeiture, or not
renewing a broadcaster's license.
According to FEC, political committees buying political advertising
supporting or opposing candidates for federal office must also meet
requirements set by Federal Campaign Finance law. Advertisements paid
for and authorized by a candidate, political committee, or their
agents, must clearly state who has authorized and paid for the
advertisement. Advertisements authorized by a candidate but paid for
by someone else must identify who paid for and authorized the
advertisement. Unauthorized advertisements must also identify the
person who paid for the advertisement and must state that the
communication is not authorized.[Footnote 22] FEC oversees the
financing of elections for federal office[Footnote 23] and ensures
organizations and individuals authorizing political advertisements
place the required statements, known as disclaimers, on the
advertisements.[Footnote 24] The disclaimer requirements apply to any
kind of communications media carrying public political advertising and
are not limited to broadcast or cablecast advertisements.[Footnote 25]
Similar to FCC, FEC initiates most enforcement activity pursuant to
complaints received from the general public, including individuals and
organizations associated with federal political campaigns. Complaints
are filed with the Office of Complaints Examination and Legal
Administration (CELA), which reviews the complaint to determine if the
complaint states facts, identifies the parties involved, and provides
or identifies supporting documentation. If the complaints are deemed
sufficient, CELA informs the complainants that they will be notified
once the case has been resolved. If FEC discovers violations,
enforcement can include negotiated corrective action, including civil
penalties, or other Commission initiated legal action seeking
judicially imposed civil penalties or other relief.
Sponsorship Identification Requirements Are Manageable, but FCC
Guidance Could Be Clarified:
As previously stated, sponsorship identification statutes and
regulations require broadcasters and cablecasters to identify
commercial content--usually an advertisement, an embedded
advertisement, or a video news release (VNR) that has been broadcast
in exchange for money or payment in-kind. According to most
broadcasters we spoke with, commercial content is fairly
straightforward to identify, and they are accustomed to dealing with
such content and report that compliance is manageable. For content
considered political or discussing a controversial public issue,
requirements, enforced by FCC and FEC, are more extensive and require
more detailed on-air announcements and tracking of all related
communications and agreements in a public file for FCC.[Footnote 26]
FCC's Sponsorship Identification Requirements for Commercial Content:
According to FCC, commercial advertisements do not always require a
sponsorship announcement. FCC does not require an announcement when an
obvious connection exists between the content and sponsor, such as
with a standard commercial advertisement. For all commercial
advertisements where the true sponsor is not apparent, even for
infomercials that may be 30 minutes or longer, FCC requires a written
or verbal announcement to occur only once during the program.[Footnote
27] This announcement must fully and fairly disclose the true identity
of those who are paying for the advertisement.[Footnote 28] In
addition, whenever an individual, such as a deejay, receives money or
payment in-kind for airing specific content or favorably discussing a
specific product a sponsorship announcement must be made. Therefore,
station employees must disclose such transactions to the station.
[Footnote 29] Thus, if a record company or its agent pays a deejay to
play records or talk favorably about an artist or record on the air,
and he does so, the result is considered sponsored content. FCC
guidance directs that the deejay must reveal the payment to the
broadcaster and a sponsorship announcement must be made when the
content goes on-the-air.[Footnote 30] According to broadcasters,
industry trade groups, and others we spoke with, compliance with these
standards and requirements is not a problem because the requirements
are part of their standard review process.
Embedded advertisements--typically, when a commercial product is
provided without charge to use in entertainment programming--may not
require a sponsorship announcement if they are reasonably related to
the show. Since many consumers now record shows or change the channel
during commercials, broadcasters have increased their use of embedded
advertising. However, a sponsorship announcement is not required every
time a product appears in a program. For example, FCC's guidance
describes scenarios in which a manufacturer provides a car to a
television show for a detective to chase and capture the villain, and
states that the use of the car alone would not require a sponsorship
announcement. In this scenario the use of the car could be considered
"reasonably related" to its use in the show. However, in the same
scenario, if a character also made a promotional statement about the
specific brand--such as its being fast--FCC requires a written or
verbal sponsorship announcement sometime during the program.[Footnote
31] According to FCC's guidance, in this second scenario, the specific
mention of the brand may go beyond what would be "reasonably related"
to its use in the show. The reasonably related standard requires some
assessment of the content. Broadcasters told us they have processes in
place to review content on their networks to determine if a program
needs a sponsorship announcement for an embedded advertisement.
VNRs are another type of commercial content which may require a
sponsorship announcement. VNRs are pre-packaged news stories that may
include only film footage or may also include suggested scripts.
However, broadcasters do not always use a VNR in its entirety but may
use portions of the video. For example, if a news story about car
manufacturing could benefit by showing video from inside a
manufacturing plant, a broadcaster may use footage from a VNR because
it cannot easily access the interior of a plant during its operations.
According to FCC, it requires broadcasters to air a sponsorship
announcement when using VNRs, even when they are provided free of
charge, under the same circumstances as it would require a sponsorship
identification for other programming. When a film or a story was
provided by a third party and it conveys value to the station, it must
have either a verbal or written sponsorship announcement, if it is
furnished in consideration for identification of a product or brand
name beyond what is reasonable related to the broadcast.[Footnote 32]
This is an update to the guidance FCC issued in its 2005 Public Notice
concerning the use of VNRs. In that Public Notice, FCC reminded
broadcasters of their obligation to comply with sponsorship
identification requirements when using VNRs and that there must be an
announcement to the audience about the source and sponsorship of the
VNR.[Footnote 33] Nevertheless, some broadcasters disagree with FCC's
position and believe it should treat VNRs similar to press releases
and not require a sponsorship announcement if a broadcaster did not
pay for the material and uses only a portion of its content. For
example, in the previous illustration, a broadcaster may use VNR
footage, because it does not have access to the interior of a car
manufacturing plant. In such instances, FCC requires broadcasters to
make an announcement that could appear on the screen during the
footage stating, "Footage furnished by ABC Motor Company" or as a
verbal or written announcement at the end of the program. Broadcasters
we spoke with had differing opinions on whether to use VNRs. While one
broadcaster believes it should be up to the news program to determine
if an announcement is needed, others we spoke with were divided about
whether to use VNRs with a sponsorship announcement or to never use
VNRs at all. Some broadcasters and others reported the use of VNRs has
been increasing, in part, because of tighter news budgets and the need
to fill airtime. In recent years, instances of VNR use without proper
credit have been reported and investigated by FCC; we will discuss
these instances later in our report.
Most broadcasters we spoke with indicated the sponsorship
identification requirements are generally manageable as part of their
review processes. As previously indicated, broadcasters told us they
have processes in place to review the different types of
advertisements and other programming aired. These reviews check to
ensure the advertisement or programming meets FCC requirements,
including the sponsorship identification requirements. Since it is
part of the standard content review process and the sponsorship
identification requirements have not changed for many years,
broadcasters told us the requirements were not difficult to meet.
FCC Sponsorship Identification Requirements for Political and
Controversial Content:
Political content and content discussing a controversial issue of
public importance are subject to all requirements that commercial
content must follow but have additional on-air and public file
sponsorship identification requirements. Advertisements that contain
political content or involve public discussion of a controversial
issue must include a sponsorship announcement at the beginning or end
of the program. If the program is longer than 5 minutes, the
announcement must be made at both the beginning and end of the
program. For broadcast television and political content discussing a
candidate, a visual announcement must be made that is at least equal
to 4 percent of the screen height must exist and lasts 4 seconds. For
broadcast radio, there must be an audible announcement.[Footnote 34]
In addition to the requirement for on-air disclosure of the identity
of those who are paying for the advertisement, broadcasters and
cablecasters are also required, where payment is not being made by an
individual, to maintain a list of the Chief Executive Officers, or
members of the Executive Committee or Board of Directors of the
corporation or other entity who paid for the advertisement.[Footnote
35] These lists are kept as part of the public inspection files
broadcasters and cable operators are required to maintain, which
includes a file for political advertising information known as the
"political file." The political file also documents information
pertaining to candidate-purchased advertisements. This includes
communications and agreements to air political advertisements and
programming, including information on times agreed to and rates paid
by advertisers. Most of the public inspection file is information that
is available only at the station or operator's place of business,
although since August 2012, FCC has required that some television
stations post their political file at an FCC-hosted website and that
all television stations post a majority of their public file on this
website by February 2013, making the file more easily accessible to
the general public.[Footnote 36]
FEC Disclaimer Requirements:
According to FEC, paid political communications supporting or opposing
candidates for election to federal office, which include radio and
television advertisements, are required to contain what are called
"disclaimer statements."[Footnote 37] FEC enforces these election
advertising disclaimer statutes and regulations. Television and radio
political advertisements authorized and paid for by a federal
candidate or his or her campaign committee or another organization
must include a disclaimer spoken by the candidate identifying him or
herself and stating that he or she approved the advertisement, as well
as a statement identifying the organization that paid for the
advertisement. Television advertisements must either show the
candidate making the disclaimer statement or show a clearly
identifiable image of the candidate during the statement. They must
also include a clearly readable written statement similar to the
verbal statement that appears at the end of the advertisement for at
least 4 seconds. Certain advertisements not approved by a candidate or
his or her committee must identify who paid for the advertisement,
state that it was not authorized by any candidate or candidate's
committee, and list the permanent street address, telephone number, or
World Wide Web address of the person who paid for the communication.
Reporting Political Advertising Financing:
In addition to monitoring compliance with these disclaimer
requirements, FEC serves as a repository for campaign finance data for
candidates for political office.[Footnote 38] Just as stations
licensed by FCC are required to preserve records to establish that
they are meeting their responsibility, among others, to treat
political candidates running for the same public office equally, FEC
oversees requirements to report campaign funding and expenditures.
Individuals, political committees, and other organizations supporting
or opposing candidates for federal office are required to report
campaign funding and expenditures for certain activities, which can
include payments made for purchasing political advertising and
information on the funds they receive for advertisements.[Footnote 39]
This reporting is done to assure that money is being collected and
spent in accordance with federal election campaign law.[Footnote 40]
The reporting requirements vary according to the purpose of the
advertisement, who paid for the advertisement, and whether it is the
product of a coordinated effort between political committees and
others.[Footnote 41] The political committees are always subject to
the reporting requirements and must submit itemized reports to FEC
showing all of their expenditures, including advertising. Political
committees must also submit itemized reports to FEC showing
contributions received, including contribution amounts, dates, and
contributor names and addresses. FEC has also required organizations
and individuals to report expenditures for political advertisements
and donations of $1,000 or more made for certain political
advertisements, called "electioneering communications," which are
related to elections for federal office and broadcasts within
specified time frames before the elections.[Footnote 42]
As described in FEC's guidance, FEC administers specific reporting
requirements for those making electioneering communications, which can
include political advertisements on television or radio. Specifically,
electioneering communications refers to any broadcast, cable, or
satellite communication that refers to a candidate for federal office
and is distributed within specific time frames before a federal
general election or federal primary election.[Footnote 43] Political
advertisements that do not meet these specifications are not subject
to these reporting requirements. Once payments for electioneering
communications, including television or radio advertisements, exceeds
$10,000 in any calendar year, those responsible for them must report
payments and the sources of funds used to FEC within 24 hours of each
broadcast.[Footnote 44] Each report must, among other things, identify:
* the person or organization that made the payments, including their
principal place of business;
* any person sharing or exercising direction or control over the
activities of the person who made the payments;
* the amount of each payment in excess of $200, the payment dates, and
the payee;
* all candidates referred to in the advertisements and the elections
in which they are candidates; and:
* the name and address of each person who donated $1,000 or more since
the first day of the preceding calendar year to those responsible for
the advertisement.[Footnote 45]
According to FEC, "coordinated communications" are contributions for
communications that are coordinated with a candidate or party
committee. These contributions are subject to amount limitations,
source prohibitions, and reporting requirements under the Federal
Election Campaign Act.[Footnote 46] Expenditures for communications
that are not coordinated, also known as independent expenditures, have
requirements to report itemized payments for the advertisements that
are triggered if they expressly advocate the election or defeat of a
clearly identified candidate. While independent expenditures are not
subject to spending limitations, they are subject to the reporting
requirements. Those responsible for the payments must report:
* their names, mailing addresses, occupations, and employers;
* the name and mailing address of the person to whom payments were
made;
* the amount, date, and purpose of each payment;
* a statement indicating whether each payment was in support of, or in
opposition to, a candidate, together with the candidate's name and
office sought;
* the identification of each person who made a contribution in excess
of $200 for the purpose of making a coordinated advertisement; and:
* a verified certification as to whether such expenditure was made in
cooperation, consultation, or concert with, or at the request or
suggestion of a candidate, a candidate's authorized committee, or its
agents, or a political party committee or its agents.[Footnote 47]
FCC Guidance for Commercial, Political, and Controversial Content:
FCC provides guidance on meeting sponsorship identification
requirements, which broadcasters we spoke with generally report to be
helpful. Broadcasters we spoke with told us they apply the sponsorship
identification requirements many times a day during reviews of
programs and when preparing news programs. This process involves
network employees viewing all content, and if a program appears to
focus too much on a product, then the broadcaster will ask the
producer of the content for a sponsorship announcement. Broadcasters
we spoke with indicated they tend to be cautious in reviewing and
identifying sponsored content in order to avoid enforcement actions.
The guidance issued in FCC's 1963 report and order has remained
substantially unchanged,[Footnote 48] and while many broadcasters
indicate the guidance is still useful, it addresses issues with older
technology that may no longer be relevant and does not discuss how the
rules apply to newer technologies. Specifically, one case example
discusses a broadcaster's use of a kinescope recording of a
congressional hearing provided by a third party.[Footnote 49] The
guidance states that "expensive kinescope prints dealing with
controversial issues are being paid for by someone," and therefore the
broadcaster should determine who and make a sponsorship announcement.
While this case example provides guidance for the use of content
discussing a controversial issue, which clearly falls under the
sponsorship identification requirements, the cost of creating such
content is less of an issue today. We have previously reported on the
benefits of revisiting provisions of regulatory programs to determine
if changes might be needed to better achieve the program's goals.
[Footnote 50] Current technologies, such as digital video equipment
and the Internet, allow similar content to be created and distributed
and it is often publicly available at no cost and the rules are not
clear how the rules apply in these situations. FCC officials told us
the agency has not updated the guidance because there has been no need
to update it. Rather, FCC officials said they have relied on case law
and public notices, among other devices, to provide guidance to
broadcasters and cablecasters.
However, some broadcasters indicated that FCC could clarify how the
guidance applies in specific situations, such as when a VNR or product
is used but the broadcaster was not paid. In its Public Notice issued
in 2005, FCC reminded broadcasters and cablecasters of their
sponsorship identification obligations and indicated that VNRs
generally need a sponsorship announcement. [Footnote 51] According to
FCC's enforcement reports, its enforcement actions against
broadcasters' and cablecasters' use of VNRs have involved cases where
the footage and script of a VNR focused too much on a specific brand
or product, beyond what was reasonably related to the story. FCC told
us these cases indicate that VNRs should be following the same rules
regarding sponsorship identification as other programming. However,
some stakeholders argue VNRs are similar to press releases because
they are often provided for with no money or payment in-kind including
no understanding or agreement that they will be broadcast on-the-air.
According to FCC guidance, a press release does not need a sponsorship
announcement.[Footnote 52] Some broadcasters indicated they remain
unsure of when there needs to be a sponsorship announcement as part of
a VNR. As a result, FCC's interpretation and the broadcasters'
interpretation of how the requirements apply to VNRs remain vastly
different, in-part because no payment is made to the broadcaster to
air the VNR. The Public Notice in 2005 sought comment on a number of
issues related to the use of VNRs and also indicated FCC intends to
issue a report or initiate a formal proceeding based on the comments
received.[Footnote 53] As of the issuance of this report, however, FCC
has taken no further action in response to the comments received.
FCC and FEC Follow Standard Procedures When Addressing All Complaints,
but FCC Does Not Update Broadcasters Named in the Complaint:
FCC Investigation and Enforcement Process:
FCC's investigation and enforcement process generally begins with a
complaint to the agency that will be reviewed by the CGB and may be
forwarded to the Enforcement Bureau if the complaint is complete. As
previously indicated, FCC receives complaints primarily through the
CGB. Since 2003, FCC has received over 200,000 complaints of all types
annually through CGB, some of which it dismisses as incomplete.
Others, including sponsorship identification complaints deemed to be
complete are forwarded to the Enforcement Bureau for possible
investigation and enforcement. Complaints involving non-political
sponsorship identification issues are forwarded to the Enforcement
Bureau; but complaints raising political sponsorship identification
issues go to the Media Bureau.
When the Enforcement Bureau receives a complaint, the bureau conducts
several reviews prior to being classified as a sponsorship
identification complaint and prior to contacting the broadcaster named
in the complaint, as shown in figure 1. First, if a complaint is
related to an alleged sponsorship identification violation, the
complaint goes to the Investigations and Hearings Division where a
manager conducts a review of the complaint. If the manager determines
the subject of the complaint to be sponsorship identification related
or related to another topic handled by the Investigations and Hearings
Division, then the complaint is assigned to an attorney. The attorney
enters it into the database at which time it is considered a case and
can be classified as related to sponsorship identification. A case may
be linked to numerous complaints, or a case may be opened even though
FCC received no complaints.[Footnote 54] For example, in 2007, FCC
received over 18,000 complaints and opened 3 sponsorship
identification cases in response to a single incident wherein a
nationally syndicated radio and television host discussed the "No
Child Left Behind" program and did not disclose that the discussion
was sponsored.
Figure 1: FCC Investigation and Enforcement Process for Sponsorship
Identification Complaints:
[Refer to PDF for image: process illustration]
1. Complaint received by FCC's Consumer and Government Affairs Bureau.
2. Forwarded to Enforcement Bureau and reviewed by Investigation and
Hearing Division.
3. Logs complaint into system and identified as sponsorship
identification case.
4. Conducts substantive review of the complaint to determine the
viability of the alleged violation.
5. Sufficient evidence?
Yes: Sends letter of inquiry to target of complaint as step to
initiate an in-depth investigation;
No: Close file or contact complainant for more in formation.
6. Target of complaint responds to letter of inquiry (LOI).
7. Enforcement Bureau reviews the response to the LOI and the evidence
to determine appropriate action.
8. Enforcement Bureau determines if violation occurred;
FCC finds a violation and takes enforcement action against the target
of the complaint; or;
FCC finds no violation and closes the case with no action.
Source: GAO description of FCC process.
[End of figure]
As shown in table 2, according to FCC, it opened 369 sponsorship
identification cases from the beginning of 2000 through 2011,
representing just over 1 percent of the total cases the Investigation
and Hearings Division opened during that time period.[Footnote 55]
According to FCC officials, after opening a case, the attorney
conducts a more substantive review to determine if the allegations in
the complaint, if true, would constitute a possible violation of any
statutes or regulations. If warranted, the attorney may contact the
complainant for more information. If it is determined that no
violation occurred or can be supported, the case may be closed
following the substantive review, by making a note in the case file.
If this substantive review determines a violation may have occurred,
then FCC will send a letter of inquiry to the broadcaster named in the
complaint initiating an in-depth investigation. As shown in table 2,
101 cases were closed following a substantive review and prior to a
letter of inquiry being sent.
Table 2: FCC Sponsorship Identification Cases within the Investigations
and Hearings Division, 2000 through 2011.
Conclusion of sponsorship identification cases: Cases with a letter of
inquiry sent;
Number of cases[A]: 242.
Conclusion of sponsorship identification cases: Closed cases with no
letter of inquiry sent;
Number of cases[A]: 101.
Conclusion of sponsorship identification cases: Total sponsorship
identification cases;
Number of cases[A]: 369.
Source: FCC Data.
[A] According to FCC, the number of cases closed without a letter of
inquiry (101) and the number of cases for a letter of inquiry has been
issued (242) does not add up to the total number of cases identified as
sponsorship identification cases (369) because some cases may be
consolidated for the purposes of a letter of inquiry and other cases
may not yet be closed in the database, although no letter of inquiry
has been issued.
[End of table]
If a case proceeds to a letter of inquiry being sent, the letter
serves as a notification to the broadcaster named in the complaint
that it is under investigation. The letter of inquiry requests
specific information concerning the complaint, such as a video of the
broadcast. As shown in table 2, from 2000 to 2011, FCC sent 242
letters of inquiry for sponsorship identification cases. Next, FCC
reviews the information provided by the broadcaster named in the
complaint in response to the letter of inquiry. If FCC determines that
a violation of the sponsorship identification requirements did not
occur or cannot be proven, it can close the case. As with the process
of closing a case prior to sending a letter of inquiry, FCC closes the
case by making a note in the case file but typically does not inform
the broadcaster named in the complaint. From 2000 through 2011, FCC
reported it closed 195 cases with no enforcement action following a
letter of inquiry.[Footnote 56]
In other cases, following the letter of inquiry, FCC may determine
that a violation occurred and seek an enforcement action. Since 2000,
FCC has issued enforcement actions in 22 sponsorship identification
cases with varying types of violations and enforcement actions. For
example, in 2011 FCC issued a notice of apparent liability to KMSP-TV
in Minnesota, for airing a VNR without identifying the sponsor of the
release. KMSP-TV was fined $4,000. In 2007, FCC issued a notice of
apparent liability to Sonshine Family television for airing five
different episodes of programs on ten separate occasions, during which
an individual discussed the federal "No Child Left Behind" program.
Sonshine was fined $40,000 because the station failed to identify the
sponsor of the content. Since 2000, FCC has also agreed to 10 consent
decrees with different broadcasters that include the broadcaster's
adopting a plan for compliance and making a voluntary contribution to
the United States Treasury. The voluntary payments to the Treasury
have varied in amounts, from as little as $12,000 for a pay-for-play
incident to as much as $4 million a separate but similar incident.
While most complaints do not end with an enforcement action, FCC
generally does not communicate with the broadcaster named in the
complaint when it closes sponsorship identification investigations. As
previously indicated, the letter of inquiry notifies the broadcaster
named in the complaint that an investigation is under way but
following that communication FCC does not provide any information on
the investigation unless the case results in an enforcement action.
GAO has previously reported that FCC enforcement actions can help
correct identified compliance problems and deter future noncompliance.
[Footnote 57] Similarly, informing a broadcaster under investigation
that a matter has been closed could help inform broadcasters about
compliant activities. Furthermore, while not specifically related to
sponsorship identification issues, in an effort to promote open
government and public participation, the administration has developed
a plan to increase openness in the government.[Footnote 58] The plan
includes an initiative to enhance enforcement of regulations through
further disclosure of compliance information. This builds on previous
guidance to use increased disclosure to provide relevant information
to help make decisions. It further directs agencies to develop plans
for providing greater transparency about their enforcement activities
and for making such information available online. However,
broadcasters we spoke with confirmed that FCC does not inform them of
the status of investigations, and some indicated they currently do not
know the status of several investigations. They reported the lack of
information about cases and FCC decisions creates uncertainty about
the propriety of their past actions. In addition, this practice of not
informing broadcasters about the results of investigations does not
align with the administration's goals to disclose compliance
information to help regulated entities make decisions. As a result,
broadcasters might not have sufficient information to determine
whether they should modify their practices. This could result in
stations unnecessarily editing content because of unwritten regulatory
policy or what they assume the policy to be.
According to FCC officials, they do not communicate with the
broadcaster named in the complaint because, among other reasons, FCC
has no legal obligation to do so. In addition, FCC officials
identified several other factors as to why it does not communicate
with the broadcaster named in the complaint. First, FCC officials told
us it does not want to inform the broadcaster named in the complaint a
case was closed because it may want to reopen the case if new evidence
presents itself. Second, officials also said that FCC does not want
closing a case to be inaccurately interpreted as an endorsement of the
action being investigated even if the investigation does not result in
a finding of a violation. Finally, officials indicated informing the
broadcaster named in the complaint about closure of an investigation
would require crafting a letter tailored to fit the unique set of
facts and requirements for each case. This would be resource
intensive, and according to FCC officials, FCC does not have
sufficient resources to implement such practices.
FCC sponsorship identification investigations can be lengthy,
according to FCC data, taking from 10 months to over 5 years to
complete. As shown in table 3, the shortest time period for resolution
of a case with an enforcement action, was 10 months. The process to
negotiate a consent decree takes longer because it often involves
complex negotiations between FCC and a broadcaster. Even when the
investigation sends a letter of inquiry and results in no enforcement
action, according to FCC officials, the median length of time to close
investigations was 38 months for approximately 200 cases. In 2011, FCC
set a performance goal to resolve 90 percent of sponsorship
identification cases within 15 months. According to FCC officials, FCC
missed its goal by a few days although officials could not provide
data to support this. Specific goals about timeliness of
investigations provide better service for regulated entities, but in
2012 and 2013 FCC removed this goal.
Table 3: Length of Time for the Investigations and Hearing Division to
Close Cases Involving a Letter of Inquiry and Resulting in an
Enforcement Action.
Enforcement action: Notice of apparent liability;
Total cases: 4;
Shortest case (total months): 10;
Longest case (total months): 52.
Enforcement action: Consent decree;
Total cases: 10;
Shortest case (total months): 20;
Longest case (total months): 61.
Source: FCC data.
[End of table]
FEC Investigation and Enforcement Process:
As previously stated, paid political advertisements require disclaimer
statements and FEC's enforcement process begins typically with a
complaint to CELA. FEC receives most disclaimer complaints from the
public. As shown in figure 2, complaints proceed through several
procedural steps, including a review and vote by the FEC
commissioners. CELA reviews the complaint for compliance with required
criteria, including ensuring it identifies the parties involved,
involves a violation of campaign finance law, and provides supporting
documentation. If a complaint does not meet these criteria, CELA
notifies the complainant of the deficiencies and informs them that no
action can be taken pursuant to the complaint unless those
deficiencies are resolved. If the complaint meets the criteria, CELA
informs the complainant that they will be notified when the matter has
been resolved. From 2000 through May 15, 2012, FEC opened 301 cases
based on complaints alleging violations of disclaimer statement
requirements. The cases were based on complaints alleging violations
of the disclaimer requirements for advertisements using various media,
including television and radio, letters, and billboards. For example,
in 2006, a complaint alleged a television advertisement for a
congressional candidate in Ohio failed to include an oral statement
that identifies the candidate and states that the candidate has
approved the communication. Less than 17 percent of the complaints
alleging violations of disclaimer statement requirements involved
television or radio disclaimer requirements.
Figure 2: FEC Investigation and Enforcement Process for Disclaimer
Complaints:
[Refer to PDF for image: process illustration]
1. CELA receives complaint about a potential violation.
2. CELAS reviews the complaint to determine whether the alleged
violation is within FEC's jurisdiction and meets specific criteria.
3. Does the Complaint fall within FEC jurisdiction and meet criteria?
Yes: FEC informs the complainant that the complaint will be pursued;
No: FEC informs the complainant that no action will be taken[A].
4. FEC sends the accused party a copy of the complaint and they have
15 days to respond.
5. FEC reviews the response and evaluates if further review is needed.
6. Does the case warrant further review?
Yes: Commissioners review complaint, responses, and General Counsel's
reports and vote whether there is "reason to believe" a violation was
committed;
Yes, and case meets additional criteria: Eligible for alternative
dispute resolution;
No: Case dismissed[B].
7. Do the Commissioners determine there is a "reason to believe" a
violation occurred?
No: Case dismissed;
Yes: continue.
8. Does the Commission need more information?
Yes: FEC conducts investigation;
No: OGC recommends conciliation:
Commission agrees:
No: Case dismissed;
Yes: Conciliation negotiated[C].
9. OGC recommends dismissal:
Yes: Case dismissed;
No: Conciliation negotiated[C].
Source: GAO description of FEC process.
[A] If the complaint does not meet the criteria the complaint may be
revised by the complainant. In those situations the complaint would
start the process over.
[B] At this point in the process OGC must review and recommend
dismissal and the Commission must agree. If the Commission does not
agree to dismiss it would then go to the Commission for a "reason to
believe" vote.
[C] If a conciliation agreement is not successfully negotiated the
complaint would return to the Commission for a vote on whether there is
"probable cause to believe" and could eventually go to litigation. This
is not a common occurrence with disclaimer complaints.
[End of figure]
Prior to taking any action other than dismissing a complaint, FEC
provides the entity named in the complaint at least 15 days to respond
and demonstrate that no violation occurred. After the response period,
FEC's Office of General Counsel evaluates the complaint and response
and may refer the case to the Alternative Dispute Resolution Office.
This office provides solutions for settling cases in lieu of
litigation and allows FEC to settle the case early in the enforcement
process. While alternative dispute resolution avoids the litigation
process, the entity named in the complaint must commit to terms for
participation in an alternative dispute resolution, which include
setting aside the statute of limitations and participating in
negotiations to settle the case, among other conditions. Alternative
dispute resolution settlements generally require entities named in the
complaints to take corrective action, such as hiring compliance
specialists, designating persons as responsible for disclosure, and
attending educational conferences. Generally, FEC does not refer cases
for alternative dispute resolution that are highly complex but does
refer cases that could include incidents where FEC believes there was
knowing and willful intent to commit violations or potential
violations in areas that FEC has set as priorities.
For cases not recommended for alternative dispute resolution, FEC
Commissioners vote before an investigation is initiated. The Federal
Election Campaign Act requires that FEC find reason to believe that a
person has committed, or is about to commit, a violation as a
precondition to opening an investigation into an alleged violation.
[Footnote 59] Should the Commissioners' vote to find reason to believe
a violation occurred, FEC and the alleged violator can negotiate a
conciliation agreement that can include a monetary penalty or
corrective action. If the Commission needs additional information
prior to settling a case using a conciliation agreement, the
Enforcement Division conducts an investigation. Violations not
resolved with a conciliation agreement can result in the Commission
filing suit against the respondents.
Our review of FEC data found the disclaimer cases resulted in 330 case
outcomes that range from dismissals to civil penalties through
conciliation agreements.[Footnote 60] However, as shown in table 4, of
the 38 outcomes that could have ended with a civil penalty--
conciliation agreement, alternative dispute resolution agreement, and
lawsuit--FEC assessed civil penalties in only 29 cases, 7 of which
were related to television or radio disclaimers.
Table 4: FEC Outcomes for Disclaimer Cases, January 1, 2000, through
May 14, 2012:
Outcome: Cases dismissed;
Number of outcomes: 168;
Notes: FEC dismissed the cases with no further action;
Percentage of total outcomes: 51%.
Outcome: FEC found no reason to believe that disclaimer rules were
violated;
Number of outcomes: 78;
Notes: Cases closed with no further action;
Percentage of total outcomes: 24%.
Outcome: FEC found a reason to believe that disclaimer rules were
violated but took no further action;
Number of outcomes: 46;
Notes: Cases closed with no further action;
Percentage of total outcomes: 14%.
Outcome: Conciliation agreement;
Number of outcomes: 23;
Notes: 22 of the 23 conciliation agreements included a civil penalty;
Percentage of total outcomes: 7%.
Outcome: Alternative dispute resolution agreement;
Number of outcomes: 14;
Notes: 7 of the 14 alternative dispute resolution agreements included
a civil penalty;
Percentage of total outcomes: 4%.
Outcome: FEC filed law suit;
Number of outcomes: 1;
Notes: FEC won the case but the court did not impose a civil penalty;
Percentage of total outcomes: Less than 1%.
Source: GAO presentation of FEC data.
[End of table]
Unlike FCC, FEC provides status updates to those involved in
investigations and issues reports explaining investigation findings.
On December 31, 2009, FEC issued guidelines for tracking and reporting
the status and time frames of complaint responses, investigations, and
enforcement actions. The guidelines require the FEC's Office of
General Counsel and the Office of Alternative Dispute Resolution to
provide the Commissioners and affected parties with a status report
once per year for cases in which the Commissioners have not yet voted
on the recommendation made by the General Counsel or the Office of
Alternative Dispute Resolution based on their initial reviews. These
status reports include estimate of when the Commissioners will vote.
Also unlike FCC, FEC issues reports explaining its resolution of
enforcement cases, including case dismissals. These reports can
clarify acceptable and unacceptable practices for the regulated
community. For example, during 2007, FEC received a complaint alleging
that a candidate had violated television advertisement disclaimer
requirements by including an improper disclaimer in the advertisement.
The complaint alleged that the printed disclaimer violated the
requirements because it did not also state that the candidate approved
the advertisement. FEC dismissed the case in an exercise of its
prosecutorial discretion to not pursue a violation in part because of
partial compliance with disclaimer requirements. In doing so, FEC
observed that the verbal disclaimer identified the candidate and
informed the public of the candidate's approval of the advertisement
and the printed disclaimer informed the public that the candidate's
committee paid for the advertisement.[Footnote 61]
Conclusions:
FCC receives hundreds of thousands of complaints related to all areas
it regulates but there have only been a small number of sponsorship
identification cases. Of the sponsorship identification cases opened
by FCC, only a handful have resulted in enforcement actions against
broadcasters, and many of those enforcement actions were for fines of
less than $100,000. Most broadcasters told us they generally have no
problems meeting the sponsorship identification requirements because
they have processes in place to review all content and ensure it has a
sponsorship announcement if needed.
However, FCC guidance for the sponsorship identification requirements
has not been updated in nearly 50 years to address more modern
technologies and applications. We have previously reported that
retrospective reviews of regulations can change behavior of regulated
entities.[Footnote 62]
Similarly, a review and update of FCC guidance that discusses outdated
technologies could result in changes in behavior. One example
discusses a broadcaster's use of expensive kinescope prints as part of
a story on a controversial issue. The example directs such a use
should receive a sponsorship announcement because of the controversial
issue being discussed and the cost of the film. Yet, today, because
the expense of providing film is no longer relevant, broadcasters may
be unsure on whether the concern is the expense of the film or the
controversial issues discussed in the film. FCC should clarify its
guidance to clearly address how, when content is provided with no
money or payment in-kind and it does not discuss a controversial
issue, the situation should be treated. Furthermore, FCC should
clarify its examples to direct broadcasters' treatment of content
provided with no money or payment in-kind that does not highlight a
product or brand beyond the "reasonably related" standard, such as a
VNR. FCC has indicated VNRs must have a sponsorship announcement;
however, FCC's enforcement of VNRs has not found fault with the use of
the VNR but rather when the VNRs focus on a specific product.
Stakeholders disagree on the use of VNRs. FCC's enforcement actions
and guidance do not distinguish how to act when portions of VNRs are
used or when a VNR does not disproportionately focus on a product or
brand. FCC indicated in 2005 that it would issue a report or take
other necessary action regarding this issue and updating the guidance
could serve this purpose.
Unlike FEC in its enforcement of disclaimer requirements, FCC's
enforcement process for sponsorship identification cases generally
does not inform the broadcasters or cablecasters named in the
complaint when investigations have been closed. In cases where a
letter of inquiry has been sent, the broadcaster or cablecaster must
fulfill its responsibility and provide FCC with the requested
information. Yet, according to FCC, because they have no legal
obligation to inform broadcasters that an investigation has concluded,
it typically does not provide that information. By providing this
information, for cases in which FCC conducts a full investigation and
determines the broadcaster's actions not to be a violation of
requirements, the outcome could provide guidance to the broadcaster of
allowable activities. Even in cases where FCC closed a case with no
investigation, informing the broadcaster that the case is closed, even
if it may be reopened in the future, would support government-wide
goals of greater transparency and sound oversight practices.
Finally, while in 2011 FCC had specific goals related to the
timeliness of completing sponsorship identification investigations, it
was unable to provide data supporting how it met those goals, and in
subsequent years it withdrew the goals. In an effort to achieve
greater openness, the timeliness of reporting and publishing
information has been identified as an essential component. By re-
establishing goals about completing sponsorship identification
investigations in a timely manner, FCC would support broader
government goals of completing actions in a timely manner to better
serve its constituencies and regulated entities.
Recommendations:
We recommend that the Chairman of the FCC take the following three
actions:
* To provide clarity on how sponsorship identification requirements
apply to activities not directly addressed by FCC's current guidance,
such as the use of video news releases, and to update its guidance to
reflect current technologies and recent FCC decisions about video news
releases, FCC should initiate a process to update its sponsorship
identification guidance and consider providing additional examples
relevant to more modern practices.
* To improve its transparency concerning which investigations are
ongoing or have been concluded and to provide guidance on allowable
activities, FCC should communicate the closure of all sponsorship
identification investigations with the broadcaster named in the
complaint after a letter of inquiry was sent. The letter should
indicate the case has been closed, but in doing so, FCC could note
that closing the case does not signify an endorsement of the actions
that were being investigated and that the case could be reopened.
* To improve timeliness of investigations and ensure, when possible,
that investigations are completed in an expeditious manner, FCC should
develop goals for completing sponsorship identification cases within a
specific time frame and develop a means to measure and report on how
well it meets those goals.
Agency Comments and Evaluation:
We provided a draft of our report to FCC and FEC for review and
comment. FCC provided comments in a letter dated January 23, 2013,
that is reprinted in appendix II. Overall, FCC indicated that it will
consider our recommendations and how to address the concerns discussed
in our report.
In response to our second recommendation--to communicate the closure
of investigations with the broadcaster named in the complaint when a
letter of inquiry has been sent--FCC identified a number of issues,
many of which were cited in our report. Specifically, FCC has concerns
that reporting the closing of a case may be misinterpreted as an
endorsement of a broadcaster's actions. FCC further noted its limited
number of Enforcement Bureau staff available to work on the large
portfolio of cases could and that it could not dedicate the necessary
time to craft closing letters tailored to each case. However, we feel
that FCC could create a standard letter--stating that a case has been
closed, that the closing of the case does not endorse the actions of
the broadcaster named in the complaint, and that the case could be
reopened because of new evidence. We believe such a standard letter
would require minimal resources to create and send, yet would
contribute to greater transparency. FCC also noted that it is
reluctant to single out sponsorship identification matters for special
treatment in terms of closure letters but are also concerned about the
even greater impact on resources if closure letters are instituted on
a broad basis. However, we believe that this could serve as a pilot
program for greater adoption of closure letters for other types of FCC
investigations. In response to FCC's concerns, we updated our
recommendation to demonstrate how a closure letter could be worded to
indicate the closure did not indicate an endorsement of the actions
being investigated and that a case could be reopened.
Both FCC and FEC provided technical comments that were incorporated as
appropriate. When providing its technical comments, FCC discussed the
treatment of VNRs indicating that although the 2005 Public Notice
states VNRs generally must have a sponsorship announcement, recent
cases involving VNR complaints have resulted in FCC treating VNRs
similar to other programming subject to the sponsorship identification
requirements. We reflected this change in the report, and added a
reference to FCC decisions about VNRs to our first recommendation.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution of it until 30
days from the date of his letter. At that time, we will send copies of
this report to the Chairman of the Federal Communications Commission,
and the Chair of the Federal Election Commission. We will also make
copies available to other on request. In addition, the report will be
available on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any question, please contact me at (202) 512-
2834 or goldsteinm@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff that made major contributions to this
report are listed in appendix III.
Signed by:
Mark L. Goldstein:
Director, Physical Infrastructure Issues:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
We were asked to review requirements for identifying the sponsors of
broadcast commercial and political advertisements and to determine the
extent to which agencies responsible for administering them address
complaints alleging violations of the requirements. Specifically, we
(1) describe the sponsorship identification requirements and guidance
for commercial and political content, the federal election disclaimer
requirements, as well as stakeholders' views of these requirements and
guidance and (2) assess how and to what extent FCC and FEC address
sponsorship complaints through each agency's enforcement process.
To describe the sponsorship identification requirements and guidance
as well as stakeholders views on these requirements and guidance, we
reviewed sponsorship identification statutes and regulations,
including the Communication Act of 1934, as amended[Footnote 63], and
the Federal Election Campaign Act.[Footnote 64] We also reviewed
relevant academic literature and interviewed FCC and FEC officials to
gather their understanding of the governing statutes and regulations,
how they have changed, their purposes, and how they apply to various
media platforms, including conventional and embedded advertising and
video news releases, and political and controversial advertisements.
We conducted interviews with over one-dozen stakeholders selected
because they are either subject to sponsorship identification
requirements, have monitored broadcasters' compliance with sponsorship
identification requirements, or contributed research to the topic.
These stakeholders' interviews were conducted with representatives
from the four major television broadcast networks as well as two
additional groups that own television and radio stations. We also
interviewed representatives from a consumer watchdog organization,
academics, and trade associations that represent broadcasters and news
directors and producers. These interviews were conducted to obtain
views on the effect of statutes and regulations and possible changes
to them.
To determine how and to what extent FCC and FEC address sponsorship
identification complaints, we interviewed FCC and FEC officials
responsible for receiving, processing, and investigating complaints.
In addition, we analyzed relevant FCC and FEC documents describing
agency methods and processes for identifying violations, receiving
sponsorship identification complaints, communicating with the
complainant and subject of the complaint, initiating and conducting
investigations, and taking enforcement actions. We also analyzed
relevant FCC and FEC data to describe sponsorship identification
complaints, investigations, and enforcement actions. We analyzed FCC
data showing all complaints received by FCC from 2000 through June
2012 to determine the percentage of complaints that were sponsorship
identification complaints, FCC actions in response to sponsorship
identification complaints, and the time frames for resolving these
complaints. We determined the FCC data to be sufficiently reliable for
our purposes based on previous analysis of the FCC database and based
on current interviews. To determine the extent to which FCC addresses
sponsorship identification complaints, we analyzed all FCC enforcement
actions pursuant to these complaints from 2000 through June 2012. We
also analyzed FEC data showing all complaints received by FEC from
2000 through May 15, 2012, to determine the percentage of complaints
that were disclaimer statement complaints, FEC actions in response to
disclaimer statement complaints, and the time frames for resolving
these complaints. The FEC data were not materially relevant to our
findings and so while we asked a series of questions about the
internal controls and data reliability, we did not make a final
determination of its reliability. To determine the extent to which FEC
addresses disclaimer statement complaints, we analyzed all FEC
disclaimer statement cases, including cases dismissed by FEC, and all
FEC disclaimer statement enforcement actions from 2000 through May 15,
2012. We also analyzed FCC and FEC strategic plans describing the
agencies' respective goals for sponsorship identification and
disclaimer statement complaint processing and enforcement. In
addition, we analyzed FCC and FEC data and documents describing
whether the agencies met their respective goals. We interviewed FCC
and FEC officials about their goals and their progress toward
achieving them.
We conducted this performance audit from March 2012 through January
2013 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Comments from the Federal Communications Commission:
Federal Communications Commission:
Washington, D.C. 20554:
January 23, 2013:
Mark Goldstein:
Director, Physical Infrastructure Team:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548:
Dear Mr. Goldstein:
Thank you for the opportunity to respond to the draft Government
Accountability Office (GAO) report addressing the Federal
Communications Commission's (Commission or FCC) implementation of the
sponsorship identification requirements in the Communications Act of
1934, as amended, and the Commission's Rules. These requirements for
broadcast stations and cable operators are grounded in the principle
that listeners and viewers deserve to know who is trying to persuade
them.
The GAO report finds that broadcasters whom GAO interviewed for this
report indicate that the guidance provided by the Commission regarding
the sponsorship identification requirements is helpful and that they
generally have no problems meeting these requirements. The report also
acknowledges that the Commission receives hundreds of thousands of
complaints concerning all the areas that it regulates, a small
percentage of which include allegations regarding sponsorship
identification requirements. Of those complaints including such
allegations, the report also indicates that the vast majority are
determined not to require any enforcement action by either the
Commission's Consumer and Governmental Affairs Bureau (COB) or
Enforcement Bureau (EB).
The report recommends that the FCC initiate a process to update its
sponsorship identification guidance and consider providing additional
examples relevant to modern practices, including the use of video news
releases (VNRs). We are pleased that GAO noted that the Commission has
publicly issued documents through the years regarding its sponsorship
identification regulations, including public notices and decisions
regarding complaints filed with the Commission. In fact, the report
references a recent decision adopted by the Commission's Enforcement
Bureau in 2011, which resolved a complaint concerning a station's on-
air use of a VNR, which are prepackaged news stories provided to
stations or cable operators by outside entities. The decision sets
forth the circumstances of the case and clearly and thoroughly
explains why the station's failure to identify the sponsor of the
subject VNR violated the Commission's Rules. While we believe that
these documents have provided useful guidance to our regulatees
regarding compliance with our sponsorship identification rules, we
appreciate the GAO's recommendation and will review this area to
determine if further guidance is necessary.
The GAO report recommends that the FCC communicate the closure of
sponsorship identification investigations with the broadcaster named
in the complaint if a letter of inquiry was sent to the broadcaster.
As the report acknowledges, the FCC does not routinely communicate
case closings for several reasons, including the resources associated
with preparing such communications; the risk of misinterpretation by
the recipient of the significance of the closing; and the chance that
a case may be re-opened if we receive additional information or
further complaints that support enforcement action.
These points remain valid reasons for generally avoiding case closing
letters. We are particularly concerned that communicating case
closures may be viewed by the recipient as an endorsement of its
conduct. Cases may be closed for reasons other than a finding that the
subject of an investigation complied with the law, e.g., insufficient
evidence, expiration of the statute of limitations, competing
priorities, etc. Such misunderstandings would be counter to GAO's
concern - and ours - that entities subject to sponsorship
identification requirements be accurately informed about the propriety
of future actions.
Moreover, as acknowledged in the GAO report, EB has extremely limited
staff who work on a large variety of cases beyond the sponsorship
identification matters. Crafting closing letters tailored to address
the unique circumstances of each sponsorship identification case would
require diverting staff resources that might otherwise be directed to
investigating and resolving cases that also represent critical public
interest concerns, including matters affecting safety of life or
property. In addition, we are reluctant to single out sponsorship
identification matters for special treatment in terms of closure
letters but are also concerned about the even greater impact on
resources if we institute closure letters on a broad basis.
Nevertheless, we appreciate GAO's suggestions and share their emphasis
on the government-wide goals of greater transparency and sound
oversight practices. We are reviewing our practices with respect to
communications with investigative targets, as well as considering how
other similar enforcement agencies handle case closure communications
in analogous circumstances.
We appreciate the suggestion to develop specific goals for completion
of sponsorship identification cases and to improve monitoring and
measurement for reporting purposes. As described in the report, the
complexity of these cases varies widely, ranging from those complaints
that can be closed by COB before referral to EB; to those that are
referred but can be closed without further examination; and further
compared to those that require a full and detailed investigation,
involving letters of inquiry, factual and legal analysis, interviews,
and drafting orders or negotiating consent decrees. It is precisely
because we recognize the importance of these cases that we devote time
to identify promising complaints and pursue them as individual
circumstances warrant. This complexity and variety makes it difficult
to establish a timeframe that is uniformly appropriate for all cases,
or even as an average timeframe.
As the draft report also recognizes, sponsorship identification cases
are a tiny fraction of our responsibilities. They comprise roughly one
percent of the cases handled by EB's Investigations and Hearings
Division. Such cases constitute an even smaller percentage of BB's
caseload overall and merely .01% of the complaints received at the FCC
as a whole. Because of limited staff resources, the same attorneys and
analysts responsible for the investigation and resolution of
sponsorship identification matters also may have other time-sensitive
assignments. Consequently, our allocation of resources must account
for competing public interest priorities; for example, addressing
cases involving public safety and other urgent issues may take
precedence over a sponsorship identification matter. Nevertheless, we
respect and value GAO's suggestions and will consider how to further
enhance our performance goals and measure our progress going forward.
We expect that the implementation of EB's new and more robust database
(the Enforcement Bureau Automated Tracking System or EBATS) will
improve the tracking and reporting process.
Once again, we appreciate GAO's recommendations and thoughtful review
of our sponsorship identification requirements. We are considering the
recommended actions and how the concerns you raise may best be
addressed. We are, for example, already improving our ability to
measure and report on goals through the ongoing implementation of the
EBATS database. We will review the other areas you have highlighted to
determine what additional action may be appropriate consistent with
all of our responsibilities.
Sincerely,
Signed by:
William T. Lake:
Chief, Media Bureau:
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Mark Goldstein (202) 512-2834 or goldsteinm@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Ray Sendejas, Assistant
Director; Eric Hudson; Bert Japikse; Michael Mgebroff; Amy Rosewarne;
and Andrew Stavisky made key contributions to this report.
[End of section]
Footnotes:
[1] Act of June 19, 1934, ch. 652, 48 Stat. 1064, (Communications Act)
(codified in title 47, United States Code).
[2] 47 U.S.C. § 317. As we use the terms in this report, "broadcaster"
means persons engaged in over-the-air transmissions as defined in 47
U.S.C.A. § 153(7); "cablecasting" refers to the widespread
dissemination of content over a cable television or radio system but
does not include the retransmission of broadcast content. 47 C.F.R. §
76.5(o). The origins of the sponsorship identification rules date from
the beginning of licensing of radio transmissions in the Act of Feb.
23, 1927, ch. 169, § 19, 44 Stat. 1162, 1170, sometimes referred to as
the Radio Act.
[3] An in-kind payment refers to goods or services provided in lieu of
cash payment.
[4] The Act of Feb. 23, 1927, ch. 169, § 19, 44 Stat. 1162, 1170,
sometimes referred to as the Radio Act.
[5] In the Matter of Promulgation of Rules and Regulations under
Section 317 of the Communications Act,9 Fed. Reg. 14734 (1944).
[6] Pub.L. No. 86-752, § 8(a), 74 Stat. 889, 895(1960). The House
Report illustrated the revised rule by providing 27 examples. H. Rept.
1800, reprinted at 1960 U.S.C.C.A.N. 3516, 3527-3532.
[7] H. Rept. 1800, 86th Cong.
[8] Amendment of Sections 3.119, 3.289, 3.654 and 3.789 of the
Commission's Rules, 34 F.C.C. 829 (1963), amending 47 C.F.R., §§
3.119, 3.289, 3.654 and 3.789, which were subsequently reclassified by
28 Fed. Reg. 13,572, 13,672 (Dec. 16, 1963).
[9] In Re Application of Sponsorship Identification Rules, 40 F.C.C.
141 (rel. May 6, 1963; pub. 1965. The 36 case examples included 27
that appear in the conference report and 9 new examples created by
FCC.)
[10] In the Matter of Amendment of Part 74, Subpart K, of the
Commission's Rules and Regulations, 20 FCC 2d 201, 223 (1969).
[11] In the Matter of Amendment of Part 74, Subpart K, of the
Commission's Rules and Regulations (Cable Television Report and
Order), 36 F.C.C.2d 141, 215, 239-241 (1972). These rules, codified at
47 C.F.R. § 76.1615 apply to programming generated by a cable operator
engaged in what the rule refers to as "origination cablecasting."
According to FCC official, FCC has never ruled on whether sponsorship
identification rules apply to programming on cable networks. See In Re
Request of A&E Television Networks for Declaratory Ruling, 15 FCC Rcd.
10796, 10800 n.2 (2000).
[12] We use the term cablecaster to be synonymous with cable operators
that create original cablecasting. Throughout the report references to
cablecasting should be understood as references to origination
cablecasting, i.e., the cablecasting subject to section 76.1615. The
term "origination cablecasting" refers specifically to cablecasting on
a cable television system over one or more channels subject to the
exclusive control of the cable operator. 47 C.F.R. § 76.5(p).
[13] In the Matter of Amendment of the Commission's Sponsorship
Identification Rules, 52 FCC 2d 701, (1975), reiterating FCC's earlier
intention and rejecting the interpretation of its rule in United
States v. WHAS, Inc., 385 F. 2d 784 (6TH Cir. 1967), affirming United
States v. WHAS, Inc., 253 F. Supp. 603 (D.Ky.1966).
[14] 7 FCC Rcd. 678 (1992).
[15] 7 FCC Rcd. 1616 (1992) (rule is codified at 47 C.F.R.
§1212(a)(2)(ii)).
[16] See, e.g., In the Matter of Sponsorship Identification Rules and
Embedded Advertising, 23 FCC Rcd. 10682 (2008).
[17] Embedded advertisements, as well as, video news releases could
contain political or controversial content. In this report, we discuss
both only as they relate to commercial content because FCC and
stakeholders, such as broadcasters and trade associations, primarily
discuss both types of advertisements as related to commercial products.
[18] 47 C.F.R. §§ 73.1212; 76.1615.
[19] FCC is not a monitoring agency but does conduct some on-site
investigations and inspections in response to complaints and in
support of its operations.
[20] 47 C.F.R. § 73.3526(e)(12).
[21] According to FCC officials, if a petition to deny a broadcast
station's renewal application raised questions regarding sponsorship
identification rule violations (a rare occurrence), the Media Bureau
would be responsible for the investigation, which would be similar to
the process followed by the Enforcement Bureau.
[22] 2 U.S.C. § 441d.
[23] In 1975, Congress created FEC to administer and enforce the
Federal Election Campaign Act of 1971, as amended. FEC is governed by
six commissioners who are appointed by the President and confirmed by
the Senate. Federal Election Campaign Act of 1971, Pub. L. No. 92-225,
86 Stat. 3 (1972), (codified as amended at 2 U.S.C. ch. 14). The
Federal Election Campaign Act was amended by the Bipartisan Campaign
Reform Act of 2002, Pub. L. No. 107-155, 116 Stat. 81 (2002). All
references to the Federal Election Campaign Act are to the 1971 act as
amended.
[24] 2 U.S.C. § 441d. Identification of funding and authorizing
sources is required for advertisements run over any broadcasting
station, newspaper, magazine, outdoor advertising facility, mailing,
or any other type of general public political advertising media. This
includes Internet advertising, provided the posting of the
advertisement is paid for by a disbursement of funds.
[25] 11 C.F.R. § 100.26.
[26] Public files must be maintained by both broadcasters and
cablecasters and contains information other than just materials
related to political and controversial content. 47 C.F.R. §§ 73.3526
(commercial), 73.3527 (noncommercial), and 76.79 (cable public file
requirements, generally).
[27] 47 C.F.R. § 73.1212(f) and see Application of Sponsorship
Identification Rules to Political Broadcasts, Teaser Announcements,
Governmental Entities and Other Organizations, Public Notice, 66 FCC.
2d 302 (1977).
[28] 47 C.F.R. §§ 73.1212(e) (for broadcast material), 76.1701(e) (for
cablecast material).
[29] 47 U.S.C. §508(a)-(c).
[30] 40 F.C.C. 141, 145, example 4.
[31] 40 F.C.C. 141, example 17, (1963).
[32] 47 C.F.R. § 73.1212(a)(2). FCC guidance for political or
controversial materials directs that any free content must still have
a sponsorship announcement. 47 C.F.R. § 73.1212(d) (for broadcast
material), § 76.1615(c) (for cablecast material). For recent case law
in this area, see e.g.,In the Matter of Fox Television Stations, Inc.,
26 FCC 3964 (2011).
[33] Federal Communications Commission, Public Notice: Commission
Reminds Broadcast Licensees, Cable Operators and Others of
Requirements Applicable to Video News Releases and Seeks Comment on
the Use of Video News Releases by Broadcast Licensees and Cable
Operators, 20 FCC Rcd. 8593 (2005).
[34] 47 U.S.C. § 315; 47 C.F.R. §§ 73.1212 (for broadcast material),
76.1615 (for cablecast material).
[35] 47 C.F.R. §§ 73.1212(e) (for broadcast material), 76.1701(e) (for
cablecast material).
[36] In May 2012, the National Association of Broadcasters filed a
petition with a Federal District Court seeking relief from the FCC
requirement for broadcasters to file political advertising information
on-line in their public files. National Association of Broadcasters v.
FCC, filed May 21, 2012 (DC Dir. No. 12-1225). An National Association
of Broadcasters request for a stay delaying the implementation of the
requirements was denied. National Association of Broadcasters v.
Federal Communications Commission (D.C. Cir. No. 12-1225, July 27,
2012). On September 18, 2012, the court granted NAB's request to defer
the briefing schedule for its petition for review, and on January 18,
2013 NAB filed a further motion to hold its case in abeyance. (D.C.
Cir. No.12-1225). As of issuance of this report, the case was not
resolved. The public file and political file data are available on an
FCC hosted website (last accessed January 23, 2013) [hyperlink,
https://stations.fcc.gov/].
[37] 2 U.S.C. § 441d. Identification of sources funding and
authorizing advertising is required for advertisements run over any
broadcasting station, newspaper, magazine, outdoor advertising
facility, mailing, or any other type of general public political
advertising.
[38] The January 21, 2010, Supreme Court ruling in Citizens United
v.FEC, 558 U.S. 310, overturned a portion of the Bipartisan Campaign
Reform Act, holding that the government may impose disclaimer and
disclosure requirements but may not suppress corporate political
speech by restricting corporations' and labor organizations' funding
certain political advertisements.
[39] Federal Election Commission, FEC and Federal Campaign Finance Law
Brochure, (Washington, D.C.: February 2011) and Federal Election
Commission, Coordinated Communications and Independent Expenditures
Brochure, (Washington, D.C.: February 2011).
[40] 11 C.F.R. §§ 104.3, 104.20.
[41] A coordinated effort between organizations means two
organizations getting together to fund political advertising, such as
political action committees.
[42] 11 C.F.R. § 104.20. FEC requires corporations or labor
organizations that make electioneering communications to disclose the
name and address of each person who made a donation aggregating $1,000
or more to a corporation or labor organization, but only those made
for the purpose of furthering electioneering communications. 11 C.F.R.
§ 104.20(c)(9). This regulation was challenged in Van Hollen v. FEC,
851 F.Supp.2d 69 (D.D.C. 2012). The plaintiff alleged that the
regulation is inconsistent with a provision of the Bipartisan Campaign
Reform Act (BCRA), § 201, codified at 2 U.S.C. § 434(f). Van Hollen v.
FEC, Civil Action No. 11-0766 (ABJ) (D.D.C. 2011) ("complaint"). The
plaintiff contended that the BRCA provides that all electioneering
communications must be disclosed and that there are no terms limiting
that requirement to those who expressly stated that their contribution
was to be used to fund electioneering contributions. Van Hollen, 851
F.Supp.2d, at 80. On plaintiff's motion for summary judgment, the
District Court found that "Congress spoke plainly [and] did not
delegate authority to the FEC to narrow the disclosure requirements
through agency rulemaking." Van Hollen, 851 F.Supp.2d, at 89. The
United States Court of Appeals for the D.C. Circuit disagreed,
reversed the lower court's summary judgment and remanded the case to
that court. See Center for Individual Freedom v. Van Hollen, 694 F.3d
109 (DC Cir. 2012). As of January 11, 2013, the litigation was
ongoing. For more information, see [hyperlink,
http://www.fec.gov/law/litigation/van_hollen.shtml] (last visited
January 11, 2013).
[43] These rules apply for certain radio and television advertisements
within 60 days of a general election and within 30 days of a primary
election. 11 C.F.R. § 104.20(b); 100.29.
[44] 2 U.S.C, § 434(f)(1); 11 C.F.R. § 104.20(b).
[45] 2 U.S.C, § 434(f)(2); 11 C.F.R. § 104.20(c).
[46] Corporations, labor unions, individuals and businesses with
federal government contracts, foreign citizens, and qualified non-
profit corporations are prohibited from coordinating these
advertisements.
[47] 11 C.F.R. §§ 104.3(b)(3)(vii) and 109.10(e).
[48] In 1975, FCC revised one case example to reflect changes to FCC's
rules. Applicability of Sponsored Identification Rules, 53 F.C.C.2d
368 (1975).
[49] A kinescope is a recording of a television program made by
filming the picture from a video monitor.
[50] GAO, Regulatory Reform: Prior Reviews of Federal Regulatory
Process Initiatives Reveal Opportunities for Improvements, [hyperlink,
http://www.gao.gov/products/GAO-05-939T] (Washington, D.C.: July 27,
2005).
[51] Public Notice (20 FCC Rcd. 8593).
[52] 40 FCC 141.
[53] Public Notice (20 F.C.C. Rcd. 8593).
[54] An FCC case may be opened because of its own research or a
congressional inquiry.
[55] These are cases that were directly received by the Enforcement
Bureau, reviewed by the Investigative and Hearings Division, and
entered into the database. This may miss some complaints if they came
through another division of FCC and were never entered into the
database.
[56] According to FCC, the number of cases closed with a letter of
inquiry sent and closed with no enforcement action (195) and the
number of cases with a letter of inquiry sent and closed with an
enforcement action (22) does not add up to the total number of cases
with a letter of inquiry sent (242) because cases may be merged when
being resolved.
[57] [hyperlink, http://www.gao.gov/products/GAO-08-125] (p.20).
[58] The Open Government Partnership: National Action Plan for the
United States of America, September 20, 2011.
[59] 2 U.S.C. § 437g(a)(2).
[60] A single case can involve allegations against multiple parties
that can result in multiple outcomes for a single case. Thus, this is
why there were only 277 disclaimer cases that closed during the review
period but 330 outcomes.
[61] FEC, Matter under Review 5834: Darcy Burner for Congress, June
28, 2007.
[62] [hyperlink, http://www.gao.gov/products/GAO-05-939T]
[63] Act of June 19, 1934, ch. 652, 48 Stat. 1064, (Communications
Act), codified in title 47, United States Code.
[64] Federal Election Campaign Act of 1971, Pub. L. No. 92-225, 86
Stat. 3 (1972), as amended, codified as 2 U.S.C. ch. 14.
[End of section]
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